Universities lose out as FE scoops cash

Further education colleges have won the lion's share of post-16 cash in a funding battle that leaves universities with cuts for the tenth consecutive year. University bosses say that the year-on-year cuts are unsustainable and pose serious problems for infrastructure and pay.

The announcement of the third and final year of the present comprehensive spending review sees colleges get Pounds 365 million more in 2001-02 than they did in 2000-01 - a 7.7 per cent real-terms increase.

Universities get an extra Pounds 295 million in 2001-02, taking the total budget to Pounds 5.7 billion. This represents a 1 per cent real-terms cut in funding per student compared with 2000-01. The settlement for 2000-01 saw a 1 per cent cut on this year. There was a 0.5 per cent cut from 1998-99 to this year.

College chiefs are pleased with their settlement, although they, like HE, foresee potential problems over pay. The settlement will take the total government grant to the Further Education Funding Council to Pounds 3.9 billion in 2001-02 - Pounds 800 million more than colleges got in 1998-99, the year before the CSR took effect.

The Association of Colleges said the settlement is a clear indication of the sector's importance in delivering the government's learning agenda. In return for the extra cash, colleges will be expected to be educating 700,000 more students by 2002 than they were in 1997.

John Brennan, director of policy development for the AoC, said: "The settlement is more than plausible in financial terms and will enable the sector to deliver the government's growth targets."

But he warned that, with only 1.5 per cent allowed for inflation, there would be problems with pay claims and knock-on effects for recruitment and retention.

The relatively poor university settlement also contains a hidden sting. Up to seven out of ten of the additional 45,000 students in 2001-02 will be studying in further education colleges. This is in line with the government's aim of increasing the numbers of people doing sub-degree qualifications, especially mature students.

Tony Bruce, policy director at the Committee of Vice-Chancellors and Principals, said: "We are concerned about the continuing cuts in the unit of funding. Given the volume of cuts over the past ten years and the investment agenda recognised from Dearing onwards, this cannot be sustained without damaging universities. Universities will be concerned about the specific problems identified by the Bett report. There is a huge bill there that is not consistent with cuts."

Universities in England will collect an estimated Pounds 405 million in student tuition fees in 2001-02, Pounds 58 million more than they are due to collect in 2000-01, the first year in which institutions will be collecting fee income from all three undergraduate years. Increased private contributions to higher education have produced an equivalent saving for the state.

David Triesman, general secretary of the Association of University Teachers, said: "They say they value staff and the quality of the student experience, but the financial provision does not bear this out. Students will be disappointed that for every penny they contribute to their fees, government cuts a penny from the fees it pays to institutions."